2017 ORS 732.542¹
Monopoly or substantial diminishment of competition
  • director’s order
  • prima facie and substantial evidence
  • determination of scope and extent of market

(1) As used in this section:

(a) “Highly concentrated market” means a market in which the share that the four largest insurers hold is 75 percent or more of the market.

(b) “Insurer” means a company that transacts insurance or a group of companies that transact insurance and are under common management, ownership or control.

(c) “Market” means the relevant product or geographical market the Director of the Department of Consumer and Business Services determines under subsection (7) of this section.

(2) The director may issue an order under ORS 732.544 (Director’s order) if an insurer fails to submit adequate information in accordance with ORS 732.539 (Notification of acquisition) or if prima facie or substantial evidence of the type described in subsection (3)(a) or (b) of this section exists to support the director’s determination that an acquisition may:

(a) Substantially diminish competition in a line of insurance in this state; or

(b) Tend to create a monopoly.

(3)(a) Prima facie evidence exists to support the director’s determination that an acquisition may substantially diminish competition in a line of insurance in this state or may tend to create a monopoly if the acquisition:

(A) Is subject to ORS 732.537 (Application of ORS 732.527, 732.539, 732.542 and 732.544 to change of control of insurer);

(B) Involves two or more insurers that compete in the same market;

(C) Will take place in a market that has a significant trend toward increased concentration, as provided in subsection (4) of this section; and

(D) Involves at least one insurer within a group of up to eight of the largest insurers in a market that has a significant trend toward increased concentration, as provided in subsection (4) of this section, and another insurer that is either within the same group or has a market share of two percent or more.

(b) Substantial evidence exists to support the director’s determination that an acquisition may substantially diminish competition in a line of insurance in this state or may tend to create a monopoly if:

(A) In a highly concentrated market the insurers involved in the acquisition hold the following shares:

______________________________________________________________________________

Insurer A Insurer B

Four percent Four percent or more

10 percent Two percent or more

15 percent One percent or more

______________________________________________________________________________

(B) In a market that is not highly concentrated, the insurers involved in the acquisition hold the following shares:

______________________________________________________________________________

Insurer A Insurer B

Five percent Five percent or more

10 percent Four percent or more

15 percent Three percent or more

19 percent One percent or more

______________________________________________________________________________

(4) Evidence of a significant trend toward increased concentration in the market exists if the aggregate market share of any grouping of as many as eight of the largest insurers in the market has increased by seven percent or more over a period of time that begins at least five years and not more than 10 years before the date of the notice described in ORS 732.539 (Notification of acquisition) and that ends on the date of the notice described in ORS 732.539 (Notification of acquisition).

(5) Notwithstanding the requirement in subsection (2) of this section to find prima facie or substantial evidence before issuing an order under ORS 732.544 (Director’s order), the director may issue the order if the director determines, on the basis of other substantial evidence, that the acquisition may substantially diminish competition in a line of insurance in this state or may tend to create a monopoly. In making a determination under this subsection, the director may consider:

(a) The market shares of the insurers involved in the acquisition;

(b) Volatility in the relative market shares among the largest insurers in the market;

(c) The number of competitors in the market;

(d) The concentration of the market and any trend toward increased concentration; and

(e) The ease with which an insurer may enter or exit the market.

(6) The director has the burden of showing prima facie evidence for the director’s determination that an acquisition may substantially diminish competition in a line of insurance in this state or may tend to create a monopoly. A person may rebut the director’s showing or determination under subsection (2), (3) or (5) of this section by providing substantial evidence to the contrary.

(7) In determining the scope and extent of the market for the purpose of determining whether an acquisition may substantially diminish competition in a line of insurance in this state or may tend to create a monopoly, the director at a minimum shall consider definitions and guidelines that the National Association of Insurance Commissioners promulgates and information that the parties to the acquisition submit. Unless the director determines otherwise:

(a) The product market is the direct written insurance premium for the line of business in this state that an insurer authorized to transact insurance in this state claims in the annual financial statement the insurer files under ORS 731.574 (Annual financial statement); and

(b) The geographical market is this state.

(8) In the tables shown in subsection (3)(b) of this section:

(a) Percentages that do not appear in the tables may be interpolated using the percentages that appear in the tables.

(b) Prima facie evidence exists for the director to determine that an acquisition may substantially diminish competition in a line of insurance in this state or may tend to create a monopoly if more than two insurers are involved in the acquisition and the total market share among the insurers exceeds the aggregated market share of “Insurer A” and “Insurer B” in any row shown in the tables.

(c) “Insurer A” is the insurer with the largest share of the market.

(9) The director may not issue an order under ORS 732.544 (Director’s order) if:

(a) The acquisition will yield substantial economies of scale or substantial economies in resource use that cannot feasibly be achieved in any other way and the economies would provide a public benefit that outweighs the public benefit of maintaining competition in the market; or

(b) The acquisition would substantially increase the availability of insurance and the public benefit from increased insurance availability outweighs the public benefit of maintaining competition in the market. [2013 c.370 §7]

1 Legislative Counsel Committee, CHAPTER 732—Organization and Corporate Procedures of Domestic Insurers; Regulation of Insurers Generally, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ors732.­html (2017) (last ac­cessed Mar. 30, 2018).
 
2 OregonLaws.org contains the con­tents of Volume 21 of the ORS, inserted along­side the per­tin­ent statutes. See the preface to the ORS An­no­ta­tions for more information.
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.